JEDDAH – The Ministry of Justice has set up a committee to look into the ownership of real estate in Makkah and Madina by banks in which foreigners have shares.
The move comes in the wake of the First Notary Public Office in Madina refusing to allow banks to own land in Makkah and Madina because it is claimed that the law prohibits foreigners from owning shares in a bank that owns land in the holy cities.
Under the current law, foreigners are not allowed to own land in the two holy cities, but there appears to be confusion about share ownership.
Hamad Al-Howshan, Director of the General Administration for Information and Publication at the Ministry of Justice, said the ministry has studied the problem and found that foreigners are allowed to own land in the two cities only by inheritance.
This is according to Article Five of the Regulation for Ownership and Investment of Real Estate.
However, he said that there is still not complete clarity on the situation. He said correspondence is continuing between the Ministry of Justice and various authorities to come to an agreement that everyone must abide by.
Saudi Gazette reported last week that the Ministry of Finance and the Saudi Arabian Monetary Authority (SAMA) were critical of a decision by the First Notary Public to refuse 11 local banks from owning land in the city.
The First Notary Public’s Office only allowed one bank to own land. Furthermore, the notary public had put on hold all real estate financing transactions for citizens in Madina.
Rashad Abu Ghararah, Director of the Ministry of Finance branch in Madina, had expressed astonishment at the decision. He said there were no regulations that excluded banks from owning property in the region.
A source at SAMA emphasized that regulations apply to all banks. The refusal to transfer ownership of real estate to 11 banks while only allowing one bank was “a personal judgment by the Notary Public Office and has not been stated in any regulation. Not only this, it is in violation of the regulations in force”.
An official at one of the local banks, whose transactions the Notary Public Office had refused to accept, said the Board of Directors of the bank had decided to create an intermediary company to complete the stalled real estate financing transactions in Madina.
Sultan Al-Zahem, Chairman of the Lawyers’ Committee at the Madina Chamber of Commerce and Industry, had said the banks’ attempt to resolve the situation through the establishment of an intermediary company did not break any land law. – Okaz/SG